Examination of Witnesses (Questions 1020-1039)
SIR NICHOLAS
STERN
7 JUNE 2006
Q1020 Chairman: Good morning everyone
and good morning to you, Sir Nicholas. Sir Nick, is that how I
address you?
Sir Nicholas Stern: Nick will
do.
Q1021 Chairman: Nick will do fine.
Thank you very much indeed. Good morning to Sir Nicholas Stern
who is the Head of the Government Economic Service. I wonder if
I could start by asking you what that means. What is your role?
Sir Nicholas Stern: The Government
Economic Service is about a thousand people across government
in different departments across thirty departments. What we do—and
I have the Head of the Economics in Government Team behind me,
Sue Holloway, who organises all this—is that we try to make
economists better by helping with the recruitment, organising
that part of the story for economists and organising the training
and the professional development of economists. We make them better
economists so that they are better able to serve government. At
the same time I work with fellow permanent secretaries to try
to encourage the appreciation of what economics can do. It is
a cross-government role.
Q1022 Chairman: It is across the
whole of the departments.
Sir Nicholas Stern: Yes, it is.
Q1023 Chairman: You have responsibility
for that. Is it analogous to the job of the chief scientific adviser?
Sir Nicholas Stern: No, it is
a bit different. I am the head of profession looking after the
development of all these people. Dave King advises HM Government
across the whole scientific story and he has a big office at the
OST. I am actually focussed on looking after the economists across
government and encouraging the better use of economics across
government. I have direct advisory roles to HM Government on the
economics of climate change and of development, but those are
separate from my GES responsibilities.
Q1024 Chairman: Why are you not called
the Chief Economic Adviser then, or the Chief Economist?
Sir Nicholas Stern: I am called
the Head of the Government Economic Service. In the past that
has been combined with Chief Economic Adviser; at other times
it has not been. At the moment I am just the Head of the Government
Economic Service.
Q1025 Chairman: In terms of the economists
who work, for instance in the Home Office or in the Department
for Education and Skills, do you have a direct supervisory responsibility
for them? Do you have a policy responsibility for them? Do they
report to you in any way or do you simply manage them in a broader
sense. I cannot get a handle on what your relationship is with
the departmental economists.
Sir Nicholas Stern: It is more
the latter. We have a professional relationship. We meet every
couple of months; all the chief economists meet and we discuss
policy issues of the day. They might bring some examples to discuss.
We discuss how to run the Government Economic Service because
we apply the same standard in all departments. From time to time
they ask me, as the head of the profession, for advice on particular
issues. It is not a direct supervisory relationship but it is
quite a close intellectual relationship and we actually meet as
a group every couple of months.
Q1026 Chairman: Do you think it would
be useful to have the equivalent for science, a government scientific
service? We seem to have one sort of set of arrangements for science
and another for economics.
Sir Nicholas Stern: Subjects are
different and functions are different and I do not see a big pay-off
in insisting that different bits operate in exactly parallel ways.
I know what works for the economists and I do not assume that
exactly that model would work for others.
Q1027 Mr Newmark: I am still not
clear on that because it seems to me you effectively have more
of an operational role in looking at the various departments within
your remit as opposed to being a chief economic adviser. Looking
at it purely from the thinking side it is more of an operational
role. I am curious as to your answer as to why you do not see
any parallel to what could be done with science and technology
in the departments and a need to separate the thinking overview
in terms of the way people view it as opposed to the operational
view which is what you seem to be handling.
Sir Nicholas Stern: It is not
quite the operational thing that I am handling, it is the professional
thing. What we are trying to do is to build a strong core of economists
in government and to build a strong understanding of what economists
can do. The latter would be in the senior management of the individual
department.
Q1028 Mr Newmark: You are still dealing,
I guess, with more the people side, purely the thinking of trying
to fill in with people the gaps you may have in thinking. Is that
right?
Sir Nicholas Stern: Yes, by getting
the right kind of people who are able to use the tools of economic
analysis well in building them and supporting them, and getting
the senior management of those departments to understand how to
use economics, that way we feel we get the strongest influence
into good economics across government. I am not an operational
quality controller looking at the economic analysis that takes
place in each individual part of government. What I do have responsibility
for is making sure that there are good economists there to do
it.
Q1029 Mr Newmark: Given the emphasis
the Chancellor as well as the Prime Minister now seem to be putting
on science and technology and the importance there, surely we
need to be thinking where those gaps are in science and technology
and dealing with it in the same way that you are dealing with
it.
Sir Nicholas Stern: That is for
Dave King and his colleagues to think through. I know after me
you have some chief scientific advisors coming.
Q1030 Chairman: That is the diplomatic
answer; we would like to know what you think. Do you think it
would be good to have the sort of arrangements that Brooks Newmark
alluded to and that I have alluded to in terms of a government
scientific service? What is your gut feeling?
Sir Nicholas Stern: I always hesitate
to propose new institutions; I always think we have enough institutions
and the challenge is to make them work well. You can ask the chief
scientific advisors if the current system is working well.
Q1031 Dr Turner: You have illustrated
how important it is to have an economic service so that government
policy can be based on good economic evidence. When I was a lad
I seem to dimly remember an institution called the Scientific
Civil Service so we did, in fact, have a scientific service in
government. That no longer exists. Are you in a position to give
an opinion—that is all I seek from you—as to whether
the fact that that is longer there has, in the recent past, weakened
the ability of the Government to make sensible use of science
and technology evidence in policy making?
Sir Nicholas Stern: That is clearly
an interesting question. I have been in government for two and
a half years and I do not have that historical sweep. My interactions
with the scientists suggest the system works pretty well. I see
Dave King a lot; I worked very closely with him on the Commission
for Africa. I spent the previous year mostly writing a report
to the Commission for Africa. This year the majority of my time
is spent on writing a big report for the Prime Minister and the
Chancellor on the economics of climate change and I interact with
Dave King a lot on that as well. We bump into each other at the
Wednesday morning meetings of permanent secretaries as well. Dave
and I get together regularly, every month or so, and we see each
other and talk to each other quite a lot outside that. Sir Gordon
Conway—who is coming up later this morning—and I have
worked together on development over the years when I was Chief
Economist of the World Bank when he was head of Rockefeller. We
interacted a lot there and our interaction has continued, particularly
now on climate change. You have Paul Wiles and Frank Kelly coming
up. The Chief Economist David Pyle in the Home Office supports
Paul and they work together very closely. In Transport the Chief
Economist is Dave Thompson and he works in parallel with Frank
Kelly and you get all kinds of integrated analyses of the way
in which the mechanical systems work in Transport and the economics
of that story alongside it. My own experience is close working
personally and with my colleagues as chief economists and their
colleagues as chief scientific advisors. My experience of that
suggests that the system of collaboration between economists and
scientists is working well. That suggests that we have somebody
good to collaborate with. Whether there are other ways of doing
it in the science side is really not for me, but what I see of
it functions well.
Q1032 Mr Newmark: You have mentioned
you meet Sir David King, but apart from climate change can you
give me a couple of other examples of areas where you met to collaborate
and discuss issues? My next question is, how often do you meet
with him on a more formal basis rather than informal?
Sir Nicholas Stern: He will have
told you—or you will know anyway—about his Foresight
analyses. Every year they get a group of serious academics—mostly
from outside government, one or two from inside—to think
through the big intellectual discoveries in their areas and how
it might fit together. That would be an area where we would be
together with Dave in thinking across a broad canvass. Most of
my personal interactions with him at the moment are on climate
change.
Q1033 Mr Newmark: Are there any other
specific policy areas that you have been working on together?
Sir Nicholas Stern: Not at the
moment. As I say, last year we did a lot of work together on Africa.
It depends on the challenge at hand really.
Q1034 Bob Spink: You are Head of
Profession for Analysis and Use of Evidence in Government. You
are an economist so you are well used to looking at the evidence
and making decisions based on the evidence. Are you ever frustrated
that policy is sometimes driven by other imperatives than evidence?
Sir Nicholas Stern: I actually
think that the way policy works at the moment is a lot more evidence-based
than I had the impression from outside before I came in. There
are so many examples across government where evidence now is really
helping to shape policy. The Welfare to Work programme was based
on quite detailed micro studies of how people respond to different
kinds of incentives as was the Educational Maintenance Allowance;
as I mentioned, the analysis of how transport systems work and
building a case for road user charges. I think, across government
macro and micro, you are seeing it much more strongly. There is
a problem of time. You would always like, as an ex-academic, more
time to look into the evidence than the pace of decision making
life allows you. That can be frustrating sometimes but it is important
to be able to offer advice in the timescales that people need
it.
Q1035 Bob Spink: You have given us
some examples of evidence driven policy which I do not altogether
accept. Let me give you some where evidence clearly was not driving
the policy. The Government's Sure Start programme, for instance,
was not evidence based; there was no evidence as to how that would
impact on families or children or communities. The drug classification
system is not evidence based; that is something that is undeniable.
The decision to go along with the EU directive on magnetic resonance
imaging was not evidence based. In fact the evidence would suggest
that was a silly thing to do. Do you feel that somehow there needs
to be more focus on the evidence base rather than on other political
imperatives such as timing and public opinion? How does the Government
actually communicate to the public all the various factors that
influence policy and the part that evidence actually plays within
the eventual policy decision that it makes?
Sir Nicholas Stern: It is difficult
for me to comment on the particular cases where I do not know
enough about the history to do it. If I take the spirit of your
question as to whether I would welcome a still stronger emphasis
on evidence base in government policy making, yes I would.
Q1036 Bob Spink: Are you aware of
any departments where they do well on taking account of evidence
and analysis or any that are week in that area?
Sir Nicholas Stern: That is a
difficult one.
Chairman: Nobody is listening to this;
you can be as bold as you like.
Q1037 Bob Spink: It is your responsibility
to push analysis and use of evidence across all departments and
so you will be aware of strengths and weaknesses across these
departments.
Sir Nicholas Stern: Let me give
you a picture in this way. If you look at the number of economists
in a department that is partly influenced by the proximity of
that department's work to the subject of economics. It is also
an indicator of how, in the past, those departments have emphasised
the economics. The big economics departments are the DTI, the
DWP, DFID and the Treasury. They are the biggest; they together
would contribute slightly under or close to half of the people
in the Government Economic Service. That, for example, is telling
you that given the large number of economists in DWP that there
is a big emphasis in DWP on the economic approach to evidence.
Q1038 Chairman: So the two largest
spending departments of Health and Education have the fewest number
of economists.
Sir Nicholas Stern: I think I
have the numbers here. I gave you the top ones. DfES has 37 compared,
for example, with DWP at 128.
Q1039 Chairman: What about Health?
Sir Nicholas Stern: Forty-two.
These are members of the GES. That is 42 for Health and 37 for
DfES, so obviously not the smallest.
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